A St. Catharines, Ont., family that owns a bed frame business needed to strike a deal with investors on Dragons’ Den — then the father-daughter duo walked away.
Carl Heinrichs, owner of Quagga Designs with his 26-year-old daughter, Janine, said they appeared on the investor-focused reality show last year for season 16. The couple invented bed frames in birch plywood – and some can be assembled without tools.
Heinrichs said he immigrated from Germany in 1993 after making custom furniture with his father and brother two years earlier.
The business eventually evolved when Heinrichs began designing furniture sets that would appeal to hotels and rental properties.
But after hearing many people complain about squeaky beds, Heinrichs started designing wooden bed frames. All of their beds are made of native birch plywood harvested in Quebec. They also use linseed oil from Germany.
“We felt people were using way too much metal,” he said. “We try to be as environmentally friendly as possible.”
In 2021, the father-daughter duo traveled to Toronto to meet the investors, known as the “dragons” on the show.
“The producer came in and put the mics and the camera right next to you and all these lights and it’s a pretty big studio…we were pretty nervous,” Heinrichs said.
They requested an investment of $200,000 in exchange for a 20% stake in the company. In the show, the company making a pitch can’t make a deal unless they get the amount of money they asked for or more.
Heinrichs said he sold $900,000 worth of products last year and made a profit of around 17%.
“They had a lot of questions for Janine, and some pretty tough ones too,” he said, adding that her young age prompted a lot of questions from potential investors.
Heinrichs said they hope to bring in dragon Michele Romanow to invest as she has experience in e-commerce.
One of its startups, Clearco (formerly Clearbanc), has invested over $2 billion in more than 4,500 companies, making it the largest e-commerce investor in the world.
The first offer, Heinrichs said, came from Wes Hall, a self-made man who orchestrated multi-billion dollar deals for Air Canada, Citigroup, Tim Hortons and Petro Canada.
Heinrichs said Hall offered him the $200,000 for 33% of the business.
Then Romanow made the same offer.
Heinrichs said his daughter asked the dragons to partner and invest together. When that didn’t work out, the family tried to haggle, offering investors $200,000 for a 25% stake in the business.
“But they didn’t move,” Heinrichs said.
The couple walked away. “It was just too much fairness,” he said.
Why withdraw from an investment offer?
Dragons’ Den did not respond to an interview request.
Gay Yuyitung is the acting director of The Forge, a McMaster University-funded business incubator that helps startups.
She said there are several reasons why a company may refuse an offer from investors.
“It’s always a balance and as much an art as a science how much equity to give up and at what stage,” Yuyitung wrote in an email.
While the standard saying is that “it’s always better to have a small piece of a big cake instead of 100% of a small one,” Yuyitung said it’s also helpful to be the one to propel business success.
“It can also come down to personalities and trust and alignment between founders and investors as to what’s worth giving up in terms of equity,” Yuyitung said.
“If you can bring in an investor you trust to help grow the business according to their vision, then that’s fine; but if the founder isn’t sure or hasn’t that confidence, then it may make sense to walk one way.”
Although he didn’t get a deal, Heinrichs said it was a good experience. After the show, he said they had sold out most of the products.
The company plans to expand to the United States
Heinrichs also said they are not giving up and plan to return to the show in the future.